This allows his head to move forward and turn, and it helps to make it look like an actual head (like on the back of the package). It looks like it was intended to do this, but they filled it in. I have no idea why they would do that.

You don't have to take him apart at all, other then popping his head off. Just pull, it comes right off. I used an X-Acto knife and carefully carved out a slot in the red plastic so the gray post could flip forward. The post is designed to move like this, but the movement is blocked and unused.

I also carved a slight curve into the ridge right above the Decepticon symbol to fit the bottom of his round head. It helps a little, but it isn't necessary. It allows him to look a little more downwards.

Here's a comparison shot from the side:

It gives him the ability to turn his head all the way to each side, as well as a little up/down movement.